The new law represent an unusually rapid response, and a rare increase in spending, from a Congress bitterly divided by most issues and bogged down in budget fights.
It took a scandal to shake lawmakers into trying to reform the long troubled VA, which has faced growing stresses after more than a decade of American wars overseas.
Whistle-blowers, and later an internal review, revealed VA employees had falsified records to hide long waiting lists for injured and ill veterans to see doctors, and had allowed lengthy delays for appropriate medical care.
“It’s wrong. It’s outrageous, and working together we set out to fix it," Obama said at a bill-signing ceremony at Fort Belvoir, Va., just outside Washington.
Obama praised the work of the VA, but cited "inexcusable" mismanagement at some VA healthcare facilities.
The law creates a new, albeit temporary, benefit for veterans and pays for it by adding roughly $10 billion to the federal deficit.
Under the new law, veterans will be allowed to book appointments with private doctors on their government insurance plans if they’ve waited for more than a month for an appointment at a VA facility or live more than 40 miles away from a VA clinic.
The bill includes roughly $6 billion to expand existing VA programs, personnel and facilities. That spending would be offset by reductions elsewhere in the budget.
Congress passed the legislation with almost no opposition before leaving town for summer recess, a clear sign of lawmakers' overwhelming support for veterans' concerns.
The waiting-list scandal forced Obama’s VA chief Eric Shinseki to resign. The president offered strong praise Thursday for Shinseki’s replacement, Bob McDonald, who assumed the post last week.
McDonald has been traveling to VA facilities to inspect conditions and has instructed employees to hold town hall meetings by the end of next month. He also is reviewing all the performance of the agency's senior leaders, in response to allegations that some leaders encouraged employees to fudge waiting lists to hide the wait times.